From: rakeshb@stanford.edu
Date: Wed Mar 12 2003 - 08:31:19 EST
I recently had a chance to read Gary M's critique of TSS and Fred's paper at his website on this topic. After reviewing the passages which they cite, I continue to find no evidence that Marx believed that the value of commodities remained stable over the long term. To be sure, Marx clearly believed that there were powerful forces against most sectors of the economy or most industrial branches (excepting for example natural monopolies) making profits above or below the average over the long term. I believe that this is all Marx meant by the idea of market prices gravitating prices of production over the long term, i.e., the idea that in most cases no sector will make much more or less than the average rate of profit. In adopting Smith's and Ricardo's ideas about natural price, Marx was thus accepting only their vision of the competitive equalization of profit rates over most sectors of the economy over time. However, the claim that unit commodity values are stable over the long term simply does NOT follow from the classicals' and Marx's recognition that in most cases (Fred and I both have discussed exceptions such as the gold industry) a sector's or industrial branch's profit rate will tend to converge towards the average over the long term. Unit commodity values do not have to be stable over the long term in order for market prices to gravitate towards prices of production such that the profit rate tends to equalize across most sectors over the long term. In fact there is no reason why the latter could not obtain with unit values falling (as they in fact do) at different rates in different sectors or branches as a result of the unevenness of continuous (or inteperiodic) technical change. That Marx assumed constant values in his expanded reproduction schemes just indicates their distance (Grossmann was the first to recognize) from an actual diachronic theory of capitalist dynamics, not the extent to which Marx had committed himself to the idea of equiibrium values. I don't think a single passage cited by Gary or Fred however even suggests that Marx thought the value of the commodities remained constant over the long term. This is an assumption from neo classical or equilibrium economics. I have quoted even Ricardo saying that the value of commodities is changing daily! Marx was a less dynamic thinker than Ricardo?! As far as I can tell, neither Fred nor Gary has cited evidence from Marx against the TSS breaking of the input=output price assumption (Ernst, Carchedi, Freeman, Kliman). I think there is even less evidence from the real world of capitalist dynamics. Rakesh
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